- The DXY index bottomed at weekly lows and managed to trim Wednesday’s losses
- The Fed’s stance seems slightly dovish, unmistakably resisting overreaction to two months of hot inflation.
- S&P PMIs came in mixed, Jobless Claims figures came in stronger than expected.
The US Dollar Index (DXY) is presently trading at 103.80, marking a 0.50% increase, nearly erasing all of Wednesday’s losses. The Greenback surged following a mix of S&P preliminary PMIs from March and robust weekly Jobless Claims data.
The prevailing consensus suggests the initiation of an easing cycle in June, with the timing of the next rate cut contingent upon incoming data. Despite recent spikes in inflation, the Federal Reserve revised its inflation projections upward. However, Jerome Powell emphasized that the bank will refrain from overreacting to these developments. This stance has pushed the Fed’s outlook toward a more dovish tone, implying a less aggressive approach to interest rates. The Dot Plot illustrates that the median rate projection by the year’s end remains at 4.6%.
Daily digest market movers: DXY is trending higher near 103.80, finding its footing after a post-FOMC sell-off
- S&P Global’s initial Purchasing Managers Survey for March indicated a slight decrease in the Services PMI, dropping from 52.3 to 51.7.
- Conversely, there was an increase in the Manufacturing PMI, rising from 52.2 to 52.5. The Composite PMI, which stood at 52.5 in February, experienced a slight dip to 52.2.
- Initial Jobless Claims for the week ending March 15 came in at 210K, lower than the expected 215K.
- Following the FOMC’s decision, US Treasury bond yields are on the rise, with the 2-year yield trading at 4.59%, the 5-year at 4.25%, and the 10-year at 4.27%.
DXY technical analysis: DXY displays bullish momentum, trims Wednesday’s losses
The technical analysis of DXY suggests a resurgence of bullish momentum. This interpretation is primarily supported by the upward slope and positive territory of the Relative Strength Index (RSI), indicating a rise in buying pressure. Furthermore, the increasing number of green bars in the Moving Average Convergence Divergence (MACD) histogram suggests a growing buying momentum.
Moreover, the index has reclaimed its position above the convergence of the 20, 100, and 200-day Simple Moving Averages (SMAs), further solidifying its robust bullish trend. Should DXY manage to maintain its position above the 103.50-70 area, the outlook would remain optimistic for the index.
